St. Louis Marketing Company quoted in Article on Outsourcing
December 15, 2005 Kolbeco company founder, Lauren Kolbe was recently quoted in St. Louis Small Business Monthly.
How To Find The Right Vendors And How To Measure Their Performance
Fifteen years ago, outsourcing was an innovative technique used mostly by large firms to run a business. Today, outsourcing such key services as payroll, human resources, storage and computer services, has become a “key to success” for companies of all sizes.
Outsourcing—the practice of using outside firms to handle work normally performed within a company—is a familiar concept to many entrepreneurs. According to the Outsourcing Institute, a professional association that tracks strategic use of outside resources, organizations in the United States alone now spend $200 billion to outsource noncore functions, not including the subcontracting of manufacturing services. In five years, the Institute estimates the U.S. outsourcing market could top $500 billion.
How can businesses find the right outsourcing partner? And how can entrepreneurs judge the overall performance of outsourcing partners? We asked a group of small-business owners to share their views on outsourcing.
Finding The Right
Maxine Clark, Build-A-Bear Workshop
“Look for partners who share your company values and understand your needs. Not everyone is suited to assist a small company. Check references as well. We check references and get referrals—again, it is about shared values and commitments to customer service—they must be aligned.”
Lauren Kolbe , Kolbeco Marketing Resources
“The first step is to recognize that outsourcing is a good option for your small business. Don’t fall into the trap of thinking that you can do everything. A specialist that you outsource to can perform better and more efficiently than a business owner who may not have expertise in certain areas. When we began outsourcing, certain functions, such as accounting, were done quicker and done right the first time. In addition, my staff’s time was freed up to focus on client work, making us a much more productive group.
When outsourcing, you are hiring someone to perform a job for you—so treat it as you would any hiring decision. Examine the candidate’s experience, ask for references, and consider how the candidate will fit into your team.”
Bonny Filandrinos, Staffing Solutions, Inc.
“Make certain that you clarify every little detail..no surprises. Also, make sure that you share values and that ‘partnership’ is truly what you seek.”
Joe Balsarotti, Software To Go
“We believe that small business owners are most productive when they can concentrate on their core competencies and outsource the business functions that require substantial investments in time and money. Their downtime is reduced, they are less distracted, and frustrated, by nonbusiness issues and they can bring in more revenue to their businesses.
“We constantly see examples, such as an architecture firm, where one of the architects and a principle of the firm was spending hours for weeks on end dealing with email issues that we could correct in a day. The lost billing time alone from that incident would have paid for almost two years of our annual consulting and a maintenance program.”
Julie Meyer, Global Event Solutions
“Some advice I would offer other entrepreneurs would be to compare overall price, quality and service before choosing your partners. You may be pleasantly surprised in the cost savings and quality of work offered. I have found when comparing different vendors that there is a big variance in pricing and quality; so for some services, I may choose to go middle of the road. It is not the lowest bidder who always wins. It is the best overall person for the job. You really do get what you pay for in most circumstances.”
Dale Furtwengler, Furtwengler & Associates, P.C.
“Look for values and capabilities in an outsourcing partner. Interestingly, you’ll feel a little schizophrenic. You’ll look for values closely aligned with yours and skills that are very different from yours. Closely aligned values are the foundation of a long-term relationship; disparate skills assure higher levels of performance in all aspects of your business.”
Darlene M. Davis, Davis Associates, Certified Public Accountants
“Make sure you partner with a provider that is the right size for your business. They must be able to accommodate you. If one is too big or too small, the relationship is lopsided and eventually will not work. Consider the expertise of the provider. Make sure it has the skills and staff needed to handle your business and to grow with your business. Ask for referrals from others you trust.”
Joseph T. Eckelkamp, Eckelkamp & Associates, CPAs
“Don’t look solely at the ‘quoted cost.’ Look at the ‘total cost of ownership.’ This means questions like: What level of individualized service/attention do you need? What functions will be ‘orphaned’ back in your operation and how will you address them? What ‘extras’ get billed in addition to the quoted amounts? What level of dialogue will be available with the outsourcer? Do you want them on-site or off-site? There are lots of factors that affect the success or failure of an outsourcing arrangement and cost is very important, but the other considerations can quickly outweigh the difference in quoted prices.”
Mary Quigg, Vandover
“You should focus on how a vendor can increase productivity and efficiency and allow you to concentrate on the core objectives of your business. Because your business will be changing and growing, select long-term vendors who demonstrate flexible pricing and service delivery structures. Find an outsourcing partner whose service offerings will grow as your business grows.”
Richie Graham, Impressions Direct
“Be sure your expectations of service are very clear with your outsourcing partners and have measurable ways of grading their service levels. Share this information with them. This will reinforce your expectations of them and show them where they are making the grade or failing. If they have more failing grades than passing, dump them right away and move on.
“Lowest price doesn’t always mean best service. Remember two old sayings: ‘You pay peanuts, you get monkeys to work for you.’ and ‘It’s easier to apologize once to your customer for higher prices than over and over again for mistakes and poor service.’”
How can entrepreneurs judge outsourcing partners?
Louise Wiedermann, Project Technology Consulting, LLC
“The more quantitative your method of evaluating an outsourcing agreement, the better it works. Building specific requirements into the contract in terms of quantities or services or timeliness, can help tremendously in having specific, measurable outcomes to rate success or failure.”
Dennis Barnes Jr., Marketing Direct, Inc.
“While a formal process is appropriate for establishing a new vendor relationship, we judge our vending partners on an ongoing basis by considering their responsiveness, flexibility, attitude, pricing, etc. The best resources treat every project like a new business opportunity…in any service industry, complacency can become your worst enemy.”
Brian R. Robinson, Cost Containment Strategies
“We match the right vendor to the situation at hand. I have a needs/wants/great evaluation form for each vendor that I use. We identify the minimum needs, the items that we would like to have and then the items that would ‘WOW’ us if we were able to achieve them, for example, a print vendor that provides online ordering, stocking of print inventory, great quality and service at a super price is great for our clients.”
Kelly Luckett, St. Louis Metalworks
“Nobody performs perfectly all of the time. A good vendor tells the truth so you can plan for the fall-out when something goes wrong instead of speaking in vague terms or making promises they can’t keep. When you look around at the Christmas party and see how many of your vendors you consider your friends, it’s a pretty good indication of how you perceive their performances.”
Ron O’Connor, O’Connor & Partners
“We’ve found that the critical factors are flexibility, responsiveness, stability, direct talk, a sincere interest in the long-term and especially an understanding of the importance of both time and budget…so those are the criteria we use in evaluating vendor partners.”
Grizzell & Co.
“I believe the future of business is about surviving and flourishing in an
economy occupied by two types of workers: owners and temps. Enormous
corporations will continue to play a role in the global economy. But,
networked micro- companies will have an equal presence.
“For years, I have believed in the importance of outsourcing. In fact, when
Grizzell & Co. began years ago, we did nothing but outsource to qualified
independents. Still do. There’s no better way to align the right talent
with the right project.”